House OKs new bill with higher automobile excise tax schedule

House passes tax reform bill with higher excise tax on automobiles

by Vince Pornelos

May 31, 2017 23:05

Yes, you can expect the prices of automobiles -among many other things- to take a significant hike next year, but not as much as originally expected.

The House of Representatives of the Philippines has today passed -after the second and third readings- the administration's tax reform package. The new piece of legislation, House Bill 5636, which will be known as the Tax Reform for Acceleration and Inclusion (TRAIN) bill, is a centerpiece of the current administration and was approved by the House of Representatives after President Rodrigo Duterte gave it a certification of urgency.

When passed to law, TRAIN will lower personal income tax (PIT), though will increase excise taxes on commodities such as automobiles.

Under HB 5636, automobile excise taxes will increase based on the schedule below, and will also be implemented in two phases: the first will take effect on January 1, 2018 while the second phase will take effect on January 1, 2019.

Like House Bill 4774, the new bill will levy more excise taxes on premium and luxury automobiles than the volume models. While higher than the current scheme, it should be noted that the new tax schedule is significantly lower than the original proposal under House Bill 4774.

The players in the Philippine auto industry voiced their concerns over a “shock” effect that would see prices rise dramatically, dampening sales for the volume brands and models and potentially cripple the premium and luxury brands.

The provisions of the bill also exclude hybrids (gas-electric, diesel-electric) or purely electric vehicles from the increased taxes. Single-cab and chassis models are also exempted along with special purpose vehicles such as cement mixers and the like.

AutoIndustriya.com will run a simulation of how the new excise tax proposal can increase vehicle prices soon.